More older Americans working than ever before

Amid the wreckage of the economic downturn, something curious happened to older Americans.

More of them are working.

Though the recession has thinned the ranks of other generations in the workforce, more people older than 55 are employed than ever before, according to the latest figures from the Bureau of Labor Statistics.

The reasons for the surge of older workers are complex, experts said, but one of the primary economic forces behind it is the growing fear among older Americans that they lack the means to support their retirement needs.

The phenomenon is closely linked to the broad shift in the United States that began in the ’80s away from reliance on company pensions toward the adoption of 401(k) plans and other personal savings.

That shift in retirement financing, combined with the recession, has dramatically increased the incentives to work into old age and appears to be reshaping how Americans ride out the latter part of their lives.

Like it or not, millions of graying Americans, some past 75 years old, are rejoining the workforce or staying in it longer than once might have been expected.

“Fear is a wonderful motivator,” said Alicia Munnell, director of the Center for Retirement Research at Boston College. “Some of these people are just clinging by their fingernails to jobs.”

In interviews, many older workers indicated that, indeed, the lack of a pension or fuller savings account was leading them to stay in the labor force longer.

A 60-year-old masonry contractor in Fairfax, Va., came out of retirement when his wife lost her job. A 70-year-old computer manager from Bethesda, Md., said he was still working because he was looking forward to a long life and he wanted to accumulate more savings to accommodate it. And a 63-year-old real estate saleswoman from Alexandria, Va., has put off retirement and, with the downturn in homes sales, sold off jewelry and purses on consignment.

“Sometimes I wish I could retire,” said Carole Oates, 63, the saleswoman. “But at this point I expect to be working as long as I can.”

An August survey by the AARP Public Policy Institute of people older than 50 showed that 57 percent reported that they were less confident than before the recession that they will have enough money to live comfortably throughout their retirement years. Similarly, 61 percent of the respondents said that their savings had fallen since the recession.

The number of people older than 55 who are working has actually risen by 3.1 million, or 12 percent, since the beginning of the recession, according to the latest figures from the Bureau of Labor Statistics. The phenomenon extends even to people 75 years and older; there are more of them working today than before the recession, too.

By contrast, the number of people between the ages of 25 and 54 who are working has shrunk by 6.5 million, for a drop of 6.5 percent.

In part, the climb in older workers is due to the growing numbers of older people, but the statistics show as well that a growing proportion of older people are interested in work.

The percentage of people 55 and older who are working or seeking work has climbed from 38.9 percent to 40.3 percent since the start of the recession, while the percentage of workers between the ages of 25 and 54 who are working or seeking work has dropped from 83.1 percent to 81.5 percent.

The rise has been fueled at least in part by gains in longevity. In addition, many jobs today are less physically onerous and make it easier for older people to perform them, experts said.

But there were two other key changes to the economics of retirement that had occurred by that time.

Changes to Social Security rules, some of them in 1983, made retiring at 70 more attractive: Those who retired later earned larger payments.

And about the same time, companies began a profound shift away from offering employees pension plans, which offered certainty and set specific ages for retirement, to 401(k) and other investment plans that relied on workers to set aside money and invest wisely.

Between 1983 and 2007, the proportion of workers with old-age benefits covered only by a “defined benefit” or traditional pension plan plummeted from 62 percent of workers to 17 percent, according to the Center for Retirement Research. Meanwhile, over the same period, the percentage of workers covered only by defined contribution plans such as 401(k)s climbed from 12 percent to 63 percent.

The shift to 401(k) plans put the burden of saving and investing for retirement on workers, and many were unable to do so. During the recession, moreover, some dug into their accounts to make it through bouts of joblessness.

Although traditional pension plans, which often began benefits at age 65, had helped establish that as the “normal” age of retirement, the shift to personal savings plans appears to be making the “normal” age of retirement more ambiguous. Workers must decide when they have enough set aside, while also forcing them to assume the risk of living longer. Although pensions continue steadily until death, personal savings accounts are finite and force workers to spread out their savings over an unknown number of years of life.

“People don’t have the incentive to retire early anymore, and they look at their nest egg and say, ‘I’d really benefit from working a few more years,’ ” said Sewin Chan, a professor of public policy at New York University.

Not everyone 55 and older is lucky enough to find a job, however. In fact, there are far more older people who want to work than there are jobs available. Due in part to the surge of older workers, the unemployment rate for people older than 55 has roughly doubled since the start of the recession, from 3.2 percent in December 2007 to 6.2 percent in December 2011.

Daniel Barnum, 73, is an architect in Houston, one of the owners of a 13-person firm.

Once he reached 65, he said, he decided to keep working because, then unmarried, he didn’t relish the prospect of hanging around the house. Plus, he said he hadn’t been wise enough to start early to set aside money for retirement.

“It would have meant life without vacations for the most part, certainly European vacations,” Barnum said.

He just got back from three weeks on the Danube with his wife, 62.

He does, however, expect to call its quits once he turns 75.

“There is within me a desire to slow down and take life a little easier, relax a little bit,” he said.